Fidelity's FCPI Fund Fights Against Your Creeping Inflation Fears

Investors looking to fight inflation often turn to Treasury Inflation Protected Securities (TIPS), but there are equity-based approaches for this scenario, too, including the Fidelity Stocks for Inflation ETF (FCPI).

FCPI, which is a year old, is designed to reflect the performance of stocks of large and mid-capitalization U.S. companies with attractive valuations, high quality profiles, and positive momentum signals, emphasizing sectors and industries that have historically outperformed in periods of rising inflation.

By many accounts, official inflation remains muted, but that ignores an array of price increases across everyday categories. It also ignores other ample signs of rising inflation, putting a spotlight on exchange traded funds such as FCPI.

“Part of the reason for that is it’s positioned as an inflation fighting fund and inflation numbers have been subdued for much of FCPI’s lifespan. However, that’s changing due to rampant government spending and historically low interest rates brought about by the Covid-19 pandemic. Indeed, there’s evidence indicating inflation is rising,” reports InvestorPlace.

Fantastic FCPI: More on the Fund

Fidelity used its self-indexing capability to create the Fidelity Stocks for Inflation Factor Index. The fund could serve investors seeking inflation protection.

FCPI YTD Performance

“Breakeven inflation rates, a market-based measure of expected inflation, have rallied since March,” according to BlackRock. “We see inflation-adjusted, or real yields, falling further, supporting prices of Treasury Inflation-Protected Securities (TIPS).”

That scenario bolsters the case for FCPI. TIPS are popular among fixed-income investors looking to protect against the scourge of inflation and ETFs make it easier to access TIPS. However, FCPI offers more upside potential without significant equity-level risk.

“FCPI addresses inflation at the equity level with a lineup that 94% large and mid caps and by allocating 44% of its weight to technology and health care names,” according to InvestorPlace.

FCPI charges 0.29% per year, or $29 on a $10,000 investment.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.